Bold BDS Order Borne Out in Business Fiber Growth Statistics

Yesterday, the Eighth Circuit Court of Appeals heard oral arguments in a challenge to the Federal Communications Commission’s new Business Data Services (BDS) regime. As you may recall, in April of last year, the FCC took the bold step of reforming the BDS rules. With this action, the Commission cleared the underbrush of unnecessary and burdensome restrictions on rates, terms and conditions for legacy dedicated, high-speed data services where competitors had deployed their own facilities in a market and were fighting for business. The Commission determined that reforming onerous regulation of these legacy services would accelerate investment in the high-speed fiber-based business services that are more capable of meeting today’s demands for increasing communications capacity. Its decision was based on its largest-ever data collection and finally concluded a debate around the regulatory treatment of these services that had dragged on for 12 long years.

The latest evidence shows that the Commission’s decision was long overdue. Vertical Systems Group, an organization that tracks facilities build-out, reports that as of 2017, over half of large and medium-sized businesses in the country have fiber optic connectivity. According to the Group’s principal, Rosemary Cochran, “[m]ore commercial U.S. buildings were newly lit with fiber during 2017 than in any other year since we initiated this research in 2004. The number of net new fiber lit buildings increased across every building size segment, and most substantially for medium size sites. Deployments will continue to accelerate because fiber is both a strategic asset for delivery of wireline business services, as well as a necessity for enabling 5G.”

And we know that increased fiber deployment drives a virtuous cycle: each time a carrier connects a new building with fiber, it makes it easier and cheaper to deploy fiber to neighboring buildings. This latest report confirms that the virtuous cycle is happening and that, in fact, it is accelerating.

Nor is this trend a new one. The FCC based its BDS decision on the largest data collection in its history, but that data reflected facilities deployment as of 2013. And it showed that, even five years ago, competitive facilities were already blanketing the country, with competitive networks in more than 95% of MSA census blocks with BDS demand. Moreover, virtually all buildings where customers use BDS were already within reach of of competitive facilities.

Opponents of regulatory reform claimed that the FCC order would squelch competition. But as the Vertical Systems study shows, quite the opposite has happened: fiber deployment to commercial buildings has accelerated. As the adage goes, “the future belongs to the bold,” and the FCC’s BDS Order boldly cleared a path for continued investment in the future of communications in this country.

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